chap1 hilton ed 9

8/12/2019 Chap1 Hilton Ed 9

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Chapter 1

The Changing Roleof Managerial

Accounting in a

Dynamic BusinessEnvironment

Copyright © 2011 by The McGraw-H il l Companies, Inc. All ri ghts reserved.McGraw-Hill/Irwin



Learning

Objective

1

1-2



Managerial accounting is the process of

Identifying

Measuring

Analyzing

Interpreting Communicating information

Define Managerial Accounting

1-3



Learning

Objective

2

1-4



Learning

Objective

3

1-6



How Managerial Accounting

Adds Value to the Organization

• Providing information for decision making and

planning.

• Assisting managers in directing and controlling

activities.• Motivating managers and other employees

towards organization’s goals.

• Measuring performance of subunits, activities,managers, and other employees.

• Assessing the organization’s competitive position.

1-7



Learning

Objective

4

1-9



Managerial versus Financial

AccountingAccounting System

(accumulates financial and

managerial accounting data in the

cost accounting system)

Managerial Accounting

Information for decision

making, planning, and

controlling anorganization’s

operations.

Financial Accounting

Published financial

statements and other

financial reports.

Internal

Users

External

Users1-10



Managerial versus Financial

AccountingManagerial Accounting Financial Accounting

Users of Information

Managers, within the organization. Interested parties, outside the orga

Regulation Not required and unregulated,

since it is intended only for

management.

Required and must conform to

generally accepted accounting

principles. Regulated by the

Financial Accounting Standards

Board, and, to a lesser degree,

the Securities and Exchange

Commission.

Source of Data The organization's basic

accounting system, plus various

other sources, such as rates of

effective products manufactured,

physical quantities of material and

labor used in production,occupancy rates in hotels and

hospitals, and average take-off

delays

Almost exclusively drawn from the

organization's basic accounting

system, which accumulates

financial information.

Nature of Reports

and Procedures

Reports often focus on subunits

within the organization, such as

departments, divisions,

geographical regions, or product

lines. Based on a combination of

Reports focus on the enterprise in

its entirety. Based almost

exclusively on historical

transaction data.

1-11



Learning

Objective

5

1-12



• A staff position supportsand assists line positions.

– Example: A costaccountant in the

manufacturing plant.

Line and Staff Positions

• A line position is directlyinvolved in achieving the

basic objectives of an

organization.

– Example: A productionsupervisor in a

manufacturing plant.

1-13



Learning

Objective

6

1-14



Controller

The chief managerial and financial accountant

responsibility for:

– Supervising accounting personnel

– Preparation of information and reports, managerial

and financial

– Analysis of accounting information

– Planning and decision making

1-15



Treasurer

Responsible for raising capital and safeguarding theorganization’s assets.

– Supervises relationships with financial institutions.

– Work with investors and potential

investors. – Manages investments.

– Establishes credit policies.

– Manages insurance coverage

1-16



Internal Auditor

Responsible for reviewing accounting procedures,records, and reports in both the controller’s and the

treasurer’s area of responsibility.

– Expresses an opinion to top

management regarding theeffectiveness of the

organizations accounting

system.

1-17



Learning

Objective

7

1-18



Major Themes in Managerial

Accounting

Managerial

Accounting

Information

and Incentives

Costs and

Benefits

Evolution and

Adaptation

Behavioral

Issues

1-19



Evolution and Adaptation in

Managerial Accounting

E-Business

Service vs.

Manufacturing Firms

Emergence of New

Industries

Global Competition

Focus on the Customer

Cross-Functional Teams

Product Life Cycles

Time-Based

CompetitionInformation and

Communication

Technology

Just-in-Time Inventory

Total Quality Management

Continuous Improvement

hange

1-20



ObjectivesMeasure the cost of

resources consumed.

Identify and eliminate

non-value-added

costs.

Cost Management Systems

Cost

Management

System

1-21



ObjectivesDetermine efficiency

and effectiveness of

major activities.Identify and evaluate

new activities thatcan improve

performance.

Cost Management Systems

Cost

Management

System

1-22



Learning

Objective

8

1-23



Product

Design

Research

and

Development

Strategic Cost Management and

the Value Chain

Securing raw

materials andother resources

Production

Marketing

Distribution

Customer

ServiceStart

1-24



Theory of Constraints

A sequential process of identifying and

removing constraints in a system.

Restrictions or barriers that impede

progress toward an objective

1-25



Learning

Objective

9

1-26



Ethical Climate of Business

The corporate scandals experienced over the lastfew years have shown us that unethical behaviorin business is wrong in a moral sense and can be

disastrous in the economy. In addition to

Sarbanes-Oxley, there will likely be more reformsin corporate governance and accounting.

1-27



Learning

Objective10

1-28



Managerial Accounting as a

CareerProfessional Organizations

Institute of Management Accountants (IMA)

Publishes

Management

Account ing

and research

studies.

Administers

Cert i f ied

Management

Accountant

program

Develops

Standards of

EthicalConduct for

Management

Accountants

1-29



Professional Ethics

Competence

ConfidentialityIntegrity

Credibility

1-30



End of Chapter 1

chap1 hilton ed 9

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